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Drivers and Outcomes of Long‐term Orientation in Cooperative Relationships
Author(s) -
Lui Steven S.,
Ngo Hangyue
Publication year - 2012
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/j.1467-8551.2010.00719.x
Subject(s) - corporate governance , asset specificity , safeguarding , asset (computer security) , term (time) , business , opportunism , market orientation , procurement , microeconomics , economics , marketing , finance , computer science , market economy , computer security , medicine , physics , nursing , quantum mechanics
We argue in this paper that a buyer may deliberately develop long‐term orientation as a governance mechanism to deal with risks arising from exchange hazards, and to reduce the opportunistic behaviour of a supplier. While the exchange hazards of asset specificity pose a safeguarding problem, those of market uncertainty pose an adaptation problem. We test our model on a sample of 221 procurement partnerships. Our results show that satisfactory prior history of a supplier, asset specificity of the buyer and market uncertainty are all positively related to a buyer's long‐term orientation towards a supplier. Consistent with the idea that asset specificity and market uncertainty pose different governance problems, we find that satisfactory prior history reduces the positive relationship between asset specificity and a buyer's long‐term orientation, but enhances the positive relationship between market uncertainty and a buyer's long‐term orientation. We also find that a buyer's long‐term orientation fully mediates the relationship between satisfactory prior history and a supplier's opportunistic behaviour. Finally, implications on the theory and the practices of relationship governance are discussed.